Noonan warns of €4bn cuts to meet targets despite spurt in economy
FINANCE Minister Michael Noonan has warned cuts could be as high as €4bn in this year's Budget, despite recent good news on growth in the economy.
The minister was speaking at the end of four days of discussions at the International Monetary Fund and World Bank meetings in Washington.
He gave a presentation on Ireland's financial progress to the Institute of International Finance (IIF). The IIF came to prominence in July when it negotiated with the EU and IMF, on behalf of the banking sector, about private sector involvement in a second Greek bailout.
Mr Noonan told the bankers that he hopes to see Ireland return to borrowing in the sovereign bond markets in 2013.
"I would hope they will put a toe in the water by next summer to see what the possibilities are and how the pricing would be," he said in response to an audience question.
"It's our intention to be back in the markets in the middle of 2013."
Afterwards, Mr Noonan told reporters the Irish economy was "further up the road" than he expected when he took office but it still had a distance to go.
He refused to rule out cuts greater than the €3.6bn in the December Budget, saying he is committed to meeting the target to cut the deficit to 8.6pc of GDP, even if it meant more austerity.
"We have to continue to build up confidence and we must have hard figures in our Budget as such. For too long, different administrations had soft figures go in and then targets were not reached," he said.
"So it is vitally important that the targets we set in the December Budget will be met at the end of 2012 and give us the basis to go forward and get out of this frightful fix.
"The destination is that we must bring our expenditure down and our tax up so that they meet, so that we're running the country effectively for what we collected in tax," he said. "So that's where we're going and then we're safe. We're safe from all foreign influences when we get to that point."
Despite that positive outlook, he warned that factors including lower growth figures would be taken into account. "The target is a deficit of 8.6 as a percentage of GDP and whatever it requires to get to that we will do that, and it looks now as if that will be more than €3.6bn.
"But I can't say how much more at this stage because I don't have sufficient data," he said.
Ireland had to focus on exports even if global growth slowed.
"There is quite clearly a world slowdown at present and if it continues we will be marking down our growth figures for next year," he said. "There is very little that we can do about demand in the United States or demand in China.
"In terms of the UK, our competitiveness is dramatically improving because they are losing ground on their inflation figures.
"So there is a potential expansion there, which we will assist in every way we can because, at present, for all the Irish food that one can produce there is a market for it at very good prices," he said.
Mr Noonan said no formal decision had been made by the Government to push for senior bondholders of Anglo Irish Bank Corp to absorb its losses.
There would be no bondholder burden on the Irish taxpayer -- funds would be used from an emergency Central Bank liquidity fund.
"There is great concern now about the European situation and about the world economy and certainly Ireland has been doing so well that it would be imprudent to risk all the ground that we have gained and all the credibility that we've achieved, particularly in the markets, for the sake of a relatively small amount of money," he said.